Threats cast doubts over oil tenders

MEXICO CITY – Uncertainty about the fate of the North American Free Trade Agreement (NAFTA) and investor protections it guarantees could crimp future investment in Mexico’s oil industry, including a high-stakes January deepwater auction.

Ahead of a fifth round of NAFTA talks in Mexico City in mid-November, Washington’s tough demands that partners Canada and Mexico resist has clouded the future of the 23-year-old pact President Donald Trump has threatened to quit if he cannot get a better deal.

The January deepwater tender of 29 blocks holding some 4.2 billion barrels of prospective reserves, could suffer if concerns about NAFTA’s future persuaded oil majors such as Chevron and Exxon Mobil Corp to sit out the auction, oil executives and former government officials say.

So far, 17 companies have begun the process of pre-qualifying for the auction.

“Future investment without those investment protections of NAFTA will take into account the higher level of risk of any dispute not being settled in a more fair manner,” Tim Callahan, Mexico country manager for Australia’s BHP Billiton, told Reuters.

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